Eye-poppin' growth 🚀
Drone delivery, Buffet's bet, and Manufacturing comeback.
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Market summary: 📊
US:
S&P 500 - up 0.75%
Nasdaq 100 - up 1.50%
India:
Nifty 50 - up 0.73%
Sensex - up 0.71%
Old pro’s unusual bet 🤝
Master investor Warren Buffet is preparing for the post-pandemic world, as global fiscal policies take rapid turns into uncharted territories and consumer behaviors shift at lightning speeds. In his latest bout, Buffet via Berkshire Hathaway, took stakes in five Japanese trading companies — commonly known as Sogo Shosha in Japan.
Buffet took about 5% stake in each of the corporations — Itochu Corp., Marubeni Corp., Mitsubishi Corp., Mitsui & Co. and Sumitomo Corp. These companies together run a dense network of logistics, commodity trading, materials, resource exploration etc. and Buffet is hopeful of synergies down the line. Also, the man rarely takes international positions which has wall street deciphering his moves very keenly.
Berkshire says it intends to hold the investments for a long term. We won’t attempt to decode the legend’s thinking here, but access to cheap, reliable cash income is what may have moved Buffet, say analysts.
Fly them drones, baby! 🙌
Amazon’s been promising drone deliveries for a while now and that reality may finally be here. The Federal Aviation Authority, regulator of the airspace in the US, finally green-lit the company’s application to fly drones for Prime deliveries.
The project has been in the making for 7 years and its passage is actually quite notable. Last mile deliveries are usually very expensive, forming 50-75% of the costs associated with shipping any package. Eliminating human labor, and delivery times, drones can drive some real savings for ecommerce platforms, freeing up valuable capital for further expansion.
For a year now Amazon was testing these drones out in select locations but a US-wide launch will be imminent. The company’s goal is to drop off a package in under 30 mins. Anyhoo, if that means not having to take calls from the delivery boi 5 times for directions, think we all can get behind this. Read more.
Fundraising is unstoppable... 👊
Let’s roll with the startups first. Online home interiors platform Homelane has raised $8 million in a bridge round led by Stride Ventures, bringing its total fundraising to over $54 million in the last 6 years. The company plans to fuel its expansion into new markets with a greater focus on non-metro cities, as well as beef up its tech chops.
Next up,
Content management and publishing SaaS startup Quintype Tech has raised ₹25 crore in Series A from IIFL’s AMC operations.
The company provides a self-service blogging platform to digital media publishers with embedded monetization and social features, with big name clients including Bloomberg Quint, Prabhat Khabar, Bar and Bench, The Quint, Swarajya using the service.
Turning our heads to a unique work-social play,
Apna.co, basically a modern LinkedIn for blue collared workforce, closed on its $8 million Series-A from existing investors Lightspeed India and Sequoia Capital India, with new investors Greenoaks Capital and Rocketship VC joining.
The company pioneers vertical communities for skilled professionals like carpenters, painters, and field sales agents etc., providing them valuable opportunities to network as well as access to other jobs within their geographies. The startup has more than 1.2 million users on the platform. 👏👏
Finally, among the enablers -
Mumbai-based integrated incubator, Venture Catalysts, announced the first close of its accelerator 9Unicorns, raising about $14 million. Emulating YC’s model, the entity will run a program offering $100,000 for a 5-7% equity stake in startups it selects, with a thick network of venture investors to tap into a follow on round.
No stopping for Zoom 🚀
Zoom’s second quarter was a total blast — the company grew its revenue by 355% making about $664M in the last 3 month alone. All metrics blew the minds of investors away. Profits grew 10 times, large customer base grew almost 4 times, and stock jumped 40% the next day. 🔥
They company made key security and diversity hires to alleviate customer concerns with the platform — one of the only hurdles the company faces. Analysts estimate about 150 million users use the platform every month right now. A year ago, that number was at about 3.5 million, marking a staggering 4700% growth.
Zoom’s meteoric rise driven purely by product leadership is becoming a case study on how despite cash rich incumbents playing in the market (Google, Cisco, Microsoft), you can still win if you deliver amazing value to your customers. Kudos to them.
Bottomline: video conferencing was barely a $4 billion market in 2019, but this year Zoom alone expects revenues of about $2.5 billion. The pandemic has created a massive opportunity for the segment, that cuts into air travel, car travel and other spending pockets that run into trillions.
Here’s a fun fact -
Manufacturing rebound 📈
Purchasing Managers’ Index (or PMI), a measure of manufacturing activity in the country, is showing promising rebound after 4 months of decline during the pandemic.
Background: In simple terms, the PMI is a measure of production activity in the country, widely used by analysts, market participants and businesses to keep a pulse on domestic value creation. It is calculated by surveying leading enterprises, and taking a stock of new orders, inventory levels, employment, and then weighting in against the company’s size, which offers a relative measure of how well we are “producing” things. Here’s a link to nerd out.
Anyway, for the month of August, the index for India stood at 52, better than the 46 levels seen in July, and much much lower than the 27 levels we saw in April. This signals a strong recovery from the core economic activity.
Skeptics were worried that India’s production levels may take a while to come back post-pandemic, especially given the unique labor migration we witnessed, but things are looking better than anticipated. Read more.
On a similar note,
Investment firm Nomura expects India’s GDP to contract about 10.8% this year, revising an earlier forecast that had us down about 6.5% for the year. Over the last quarter, India’s GDP apparently contracted almost 24% versus the same period a year earlier, but as lockdowns ease we are expected to return to growth.
Especially with Diwali and holiday season upcoming now, markets are holding their fingers crossed. So far, it's clear that while production and supply side has recovered strongly but consumer demand is kinda lagging. However, the Government has held its guns close to its chest, with little stimulus or damage-protection programs announced by far, which means they have a lot more options to control damage if things really start to spiral down.
Tweet of the day -
What else are we snackin’ 🍿
💰 RIL offloads assets - Singapore's sovereign wealth fund along with a group of investors including Brookfield Infrastructure Partners closed on a $3.4 billion deal buying Indian telecom tower company from a unit of Reliance Industries. The deal signed last December had been waiting for regulatory approval.
🍎 Apple’s bold bet - Despite a weak global smartphone market, Apple thinks it can get you to buy expensive 5G phones. The company has asked suppliers to make at least 75 million 5G iPhones for later this year, along with new Apple Watch models, a new iPad Air and a smaller HomePod speaker. The devices are yet to be formally announced by Apple though.
🗞️ Facebook vs. Australia - FB claims it will block news sharing on its platforms in Australia, as the country moves ahead with the proposal to force the U.S. tech giant to share revenue with local media outlets. Recently Google had vehemently objected to the ruling as well.
💨 Musk speeds past Zuck- Elon is now the third-richest person in the world, passing Mark Zuckerberg earlier this week as shares of Tesla rallied following a stock split. The rally puts Musk’s net worth past $115 billion compared with $111 billion for Zuckerberg.
⚽ Bechkam will teach you to be healthy- Tata has roped in famed soccer star David Beckham for an online family wellness workshop 'Sehat Ka Rakshakaran'. The workshop will have five more experts from different fields and will discuss physical, mental and financial health. Quite impressive, India could surely use some awareness around these basic topics.
👍 RBI warms up to a new era - regulators are set to soon allow insurance companies to use video-based authentication methods as a legit means of KYC processing. A detailed letter was sent to top insurance players explaining the new allowance.
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